A years-long wrangle over a property investment in the South Island that went sour has ended on a sweet note for some 75 investors, mainly Singaporean, when New Zealand's top court ruled that they should get back their deposits of NZ$8 million (S$7.8 million), which includes interest.
The court upheld by a three-to-two majority the investors' right to also back out of the three-stage project, which stalled after the first stage when the developer went bankrupt.
The investors, who include Malaysians, will also recover some NZ$800,000 in legal costs, counsel Phil Creagh, representing a large group, told The Straits Times yesterday.
At issue was the meaning of the agreements for sale and purchase of apartments bought off plans for the development, on the shores of Lake Wakatipu near Queenstown.
In judgment grounds issued earlier this month, New Zealand Chief Justice Sian Elias ruled with the majority that the completion of the three stages was an essential term in the contract.
"Because the (seller) had put it out of its power to complete the development at the time it called for settlement, the purchasers of the apartments in the first stage were not obliged to settle the purchases," said Dame Elias.
Between 2006 and 2010, the investors signed contracts to buy high-end apartments - part of the first stage of the development. Partway through construction, the global financial crisis occurred.
The three-stage project involved an integrated lakeside resort development called Kawarau Falls Station, with over a dozen hotels and serviced apartment complexes.
In 2007, developer Peninsula shifted the stage-one assets to Melview (Kawarau Falls Station) Investments, which went into receivership in 2009. Ownership of the assets was passed in 2010 to its subsidiary Kawarau Village Holdings, which then dealt with buyers.
When the apartments were completed, the sellers demanded payment. But the buyers refused despite standing to forfeit deposits.
The stand-off went to the New Zealand High Court, which ruled in favour of the sellers, in holding that they were not obliged to finish all three stages of the project.
A three-judge court of appeal in September last year disagreed and supported the investors, paving the way to a final appeal by the Kawarau Village in the New Zealand Supreme Court heard in April. The appeal was rejected on Oct 6.
The completion of the entire project was an essential term of the contract and "the vendor was not in a position to cancel the contract", said Justice Ellen France.
The Singaporean investors listed in the case headed by Dr Ho Kok Sun ranged from wealthy individuals to Housing Board flat owners seeking to invest for retirement.
Mr Creagh said the New Zealand courts had affirmed developers were obliged to deliver a project as promised and could not force purchasers to settle on property that was essentially not as promised.
Lawyer Mitch Singh of New Zealand firm Glaister Ennor, which also acted for a big group, said "this victory reinforces that overseas investors can have confidence in the quality and fairness of our legal system here in New Zealand". Calling it a "victory for commercial common sense", he said clients had endured a six-year process, and the right result had been delivered.